Kashmir Sacrificed, Delhi Satisfied: How India Fuels Its Economy by Draining Kashmir
Mineral Wealth of IIOJK: A Strategic Economic Asset:
The primary goal of colonialism is to use the occupied territory’s resources to strengthen its own economy. British colonialism in India is a well-known example of this theory. During their 200-year stay in India, the British Crown looted 45 trillion dollars under the cloak of taxation, trade, industry, and development. Today, India is employing the same strategy to seize and exploit the natural resources of Indian Illegally Occupied Jammu and Kashmir (IIOJK) for its own economic gain.
Jammu and Kashmir’s location is strategically important because it is surrounded by the Himalayan and Pir Panjal mountain ranges. Jammu and Kashmir has over 500 mineral blocks and is India’s only producer of borax and sapphire. Furthermore, IIOJK produces 36% of India’s graphite, 21% of India’s marble, and 14% of India’s gypsum resources. IIOJK produces coal, magnesite, and limestone, all of which contribute significantly to India’s economy
The IIOJK is home to five major rivers from South Asia. IIOJK has nearly 1230 water bodies. The rivers are Jhelum, Chenab, Indus, Ravi, and Tawi. Lakes, glaciers, and rivers provide large water flow. The region’s important lakes include Wular Lake, Manasbal Lake, Dal Lake, and Nageen Lake. IIOJK’s forests are classified into forty-two types, the majority of which are Himalayan Moist Temperate forests. Other common forest types include Himalayan dry temperate, subtropical dry evergreen, broad-leaved, subtropical pine, and subalpine forests. Deodar, cedar, chir, kail, fir, softwood coniferous, and non-coniferous trees are major trees in forest cover.
Kashmir’s Strategic Importance in Regional Trade:
Kashmir lies at the crossroads of India and Central Asia. Central Asia serves as a physical link between the rest of Asia. Pakistan has a very little trade with India, and it does not provide a route for trade with Afghanistan. India also struggles to trade with Afghanistan via Iran because it is a long and expensive route. This is where Kashmir comes in for India’s trade and economy. The annexation of Kashmir would provide India with a significant advantage, allowing it to establish a strategic foothold in Central Asia, a region rich in natural resources, including massive oil, gas, and cheap hydropower reserves.
Economic Colonization through Demographic Change:
The Indian government also repealed 35A and 370, which granted Kashmiris special rights to own property and state government jobs. The goal of this abrogation is to change the demographics of India’s only Muslim-majority region. Because of this step, Kashmir’s job market has shrunk, resulting in a devastating rate of unemployment over the last five years. When Jammu and Kashmir’s autonomy was removed, the region’s unemployment rate was 5.1%, but it is now 24.6%, significantly higher than the national average of 6.1%. This equals more than ten lakh (1 million) educated young people in the region who are having difficulty securing jobs. According to reports, non-Kashmiris received 70% of the mineral extraction contracts in IIOJK during this time period. Handing over Kashmir’s mineral contracts to non-locals has caused a surge in material costs, forcing local residents to pause construction work. Mining contracts given to outsiders have also resulted in job losses for locals. Tourism, handicraft, and agriculture, all of which are vital to Kashmir’s economy, have also suffered greatly in recent years.
Exploitation of Key Natural Resources
- Water resource:
India has never followed the Indus Water Treaty in its original spirit. India has always sought to subjugate Pakistan and Kashmir while prioritizing its own interests. India has always eyed the water resources of Kashmir, as they have the potential to provide electricity to a huge portion of India. Last January, the IIOJK Hindu-nationalist administration led by Manoj Sinha signed a 40-year power deal with Rajasthan. Despite the chronic power outage, the occupied region’s resources are depleted even further. These steps intentionally deprive IIOJK of the electricity it generates. Various villages in IIOJK only have access to electricity for 2-3 hours per day, which is deadly during the winter. Political parties have questioned the administration, noting that the IIOJK is already experiencing a “severe power crisis.” Mehbooba Mufti, the president of the Peoples Democratic Party (PDP), has warned that delivering energy to Rajasthan from Kashmir will “rob” the people of IIOJK.
Hydropower at Human Cost:
In IIOJK, Ujh, a tributary of the Ravi River that eventually flows into the Indus River, has been targeted by the Indian state for a project that will generate 186 megawatts of electricity. A small village named Dungara, which is home to farmers who grow fruit, rice, and mulberry trees for silk production, will be completely submerged as a result of this project. This project will have several consequences, like the displacement of 3,700 families across 52 villages, the deforestation of around 340,000 trees, which will endanger the local climate, and the absence of local consultation, raising serious concerns about indigenous rights.
Similarly, in Kishtwar district, about 250 kilometers northeast of Jammu, the Indian state is building seven new hydropower dams on the Chenab River and its tributaries. The activities of construction, such as mountain blasting and tunnel digging, have caused landslides that have destroyed homes, cracks in houses that make them uninhabitable, and the acquisition of agricultural lands without adequate compensation. These projects will directly affect around 20,000 people, many of whom were promised jobs, training, and educational support—promises that remain unfulfilled.
In the remote region of Marwah, home to 35,000 people, the Bursar Hydroelectric Project on the Marusudar River, which is a tributary of the Chenab, adds to the crisis. According to the government assessment, 336 families will be displaced, and 1052 families will be impacted indirectly. Around 1100 structures, including homes, schools, shops, cattle sheds, and mosques, will be dismantled. However, civil society organizations estimate the real impact to be much higher, saying it will displace more than 10,000 people across 20 villages. In agricultural communities, the land is not just an economic activity; rather, it is a source of identity, a cultural symbol, and a survival tool.
The construction of Baglihar Dam devastated the whole town of Pul Doda, submerging the homes and livelihoods of 1400 people. This project pushed 400 families into poverty, despite false promises of resettlement and assistance. Both the Bussar and, earlier, the Baglihar Hydroelectric projects were cleared without proper site inspections to assess environmental and climatic risks.
New Hydropower projects ignite new fears in Ladakh:
India has launched a strategic master plan to block or control the flow of the Indus River via ten new mega hydropower projects in Ladakh, a disputed region. The announcement has raised serious concerns in Pakistan, which sees it as a direct violation of the Indus Waters Treaty (IWT), signed in 1960 with World Bank mediation.
Among the projects are the Achinathang-Sanjak, Parfila, Sont (Batalik), and Khaltsi dams. According to Pakistan’s top water expert, Irshad H. Abbasi, these projects exceed the treaty’s permissible limits, particularly in terms of water storage. His concerns were expressed in a letter to UN Secretary-General António Guterres, which warned of a “humanitarian crisis in the making.”
Abbasi emphasized that, while the projects are justified as necessary for India’s military operations in Siachen to provide power and heat to troops, they disregard the basic rights of the local Ladakhi population, which continues to suffer from extreme cold and energy poverty.
- Kashmir’s Green Cover under Siege:
Climate experts have raised serious concerns about the social and environmental consequences of the Ujh multipurpose project, which threatens to cut over 340,000 trees for its construction. This massive deforestation not only endangers the biodiversity of Ujh, but it also accelerates ecological imbalance in an already fragile region.
Simultaneously, the forest department in Indian Illegally Occupied Jammu and Kashmir has started to intensify its control over forest land. The forest department recently published a list of around 63,000 people, accusing them of “illegally” living and farming on 15,000 hectares (37,000 acres) of forest land. This move has seriously raised concerns that a big displacement of indigenous people will be done by the Indian government; these people have coexisted with the forests for generations.
In parallel, under the president’s rule, the IIOJK government diverted nearly 243 hectares of forest land for army and paramilitary use, with an additional 727 hectares cleared in just one month. This step will further contribute to the reduction of forest land and the militarization of environmentally sensitive areas. Such a grant in the middle of a dense forest is calling attention to the Indian armed forces’ illegal activities and training.
Despite the availability of licensed government wood, IIOJK is seeing an alarming increase in timber smuggling. According to Dr. Shaqil Rumshoo of Kashmir University, “the problem is both substantial and widespread,” involving a large number of actors. This illegally cut timber is mostly exported to Punjab, where it is refined into a variety of products before being supplied to international markets. The market value of these timber-related products is enormous. India’s timber exports in 2022 were nearly $900 million, with products such as teak, acacia, bamboo, rosewood, and mango wood primarily exported to the United States, UAE, Bhutan, Netherlands, and Nepal. However, this thriving trade has had a significant environmental impact, particularly in IIOJK’s forested areas. The profit of this trade barely reaches the pockets of Kashmiris, which is another dilemma.
The use of mechanized cutters by the IIOJK’s state forest corporation has also raised concerns among environmentalists. These groups frequently argue that such practices violate forest protection standards and fuel illegal timber trade and that locals, who have traditionally served as natural stewards of the land, are consistently excluded from critical forest resource management decisions. In an attempt to regulate this sector, the IIOJK government established the Jammu and Kashmir Wood-Based Industries (Establishment and Regulation) Rules, 2022. All wood-based industries must now obtain licenses before establishing, expanding, or operating. However, questions remain about the transparency of the licensing procedure, as more profitable projects are explicitly granted to non-Kashmiris, further undermining Kashmiris’ economic conditions.
- Rise of Corporate Control in IIOJK:
The systematic exploitation of Kashmir’s mineral wealth has intensified; there has been a significant increase in exploitative resource extraction in IIOJK since the repeal of Articles 370 and 35A. After 2019, nearly 70% of mineral extraction contracts were awarded to non-Kashmiris in an effort to deliberately sideline Kashmiri entrepreneurs. As a result, local investors were unable to obtain essential materials such as sand and gravel, causing construction projects to stall and raising mineral costs. Indian corporations dominate Kashmir’s mining sector, extracting valuable resources at low cost while generating high profits. Local Kashmiris are denied jobs in such ventures, contributing to regional unemployment and inequality. The step of awarding contracts to Indians rather than Kashmiris has deprived Kashmiris of both economic benefits and control over their land.
The Jammu and Kashmir National Panthers Party (JKNPP) has accused the Indian government of authoritarian theft of the region’s resources. In 2023, India claimed to have found a 5.9 million ton lithium reserve in the Reasi region of IIOJK, making India the fifth largest holder of lithium reserves. Lithium is very essential in the Indian economy as it is used in batteries. India is a rising giant in EV production, and it will illegally use lithium from IIOJK to boost its EV industry. The auction of lithium was planned without consultations or elections, which again violates democratic principles of indigenous people. Instead of empowering locals, the central government labelled the discovery as a national asset with no economic or employment benefit plan for local Kashmiris.
Key Minerals in Kashmir and Their Exploitation:
IIOJK is naturally rich in several minerals that are primarily extracted by Indian companies to use as raw material in Indian industries, reminds of East India Company and British colonialism. Kashmiris remain deprived of profits and employment. Below are some minerals which are or are in plans of Indian government to use in Indian industry.
|
Mineral |
Uses |
Major Extraction Areas |
Beneficiary |
|
Gypsum |
Cement, POP, soil conditioner |
Uri, Samba, Kathua |
Cement industries in India |
|
Limestone |
Cement, steel, chemicals |
Anantnag, Reasi, Udhampur |
Construction sector in mainland India |
|
Lithium |
EV batteries, energy storage |
Reasi |
Multinational corporations & Indian EV market |
|
Sapphire |
Jewelry, precision optics |
Paddar (Kishtwar) |
Export-oriented profit, not local |
|
Bauxite |
Aluminum production |
Udhampur, Poonch |
Transportation & packaging industries |
|
Magnesite |
Refractories, fertilizers |
Kupwara, Uri |
Steelmaking outside Kashmir |
|
Coal |
Power generation, fuel |
Kalakote (Rajouri) |
Thermal plants in other Indian states |
|
Quartz & Silica Sand |
Glass, ceramics, and electronics |
Pulwama, Anantnag |
Tech & manufacturing industries |
The Modi government’s mineral extraction policies have disproportionately harmed local communities. There is a severe shortage of materials due to rising prices; as a result, construction and infrastructure work in IIOJK has halted for locals. New and well-paid jobs are only available to imported labor and Indian corporations. Affected districts also experience an indirect impact on agriculture, biodiversity, and water resources. When grassroots issues go unaddressed and the G20 tourism meeting is held in Kashmir, these events are designed to internationalize this exploitation. The Modi government promotes a narrative of investment opportunity and prosperity, but the reality on the ground is one of resource looting and dispossession.
- Farming Under Fear in Occupied Kashmir:
Apple farming is the largest employment generator in Indian Illegally Occupied Jammu and Kashmir, with nearly 3.5 million farmers accounting for 27 percent of the total population. This population is directly or indirectly involved in fruit production. The Kashmiri apple is famous around the world, and its exports account for 8% of the region’s GDP. Al Jazeera reported in a survey based on interviews with locals that locals are afraid that they will spend their entire lives growing apples only to have them forcibly taken by the authorities. Government survey teams arrive to measure their orchards, accompanied by security forces, in order to avoid any meaningful resistance from farmers. Another issue is arising: direct selling by farmers under the Agricultural Produce Market Committee (APMC) laws. There is documented evidence that middlemen and market structure significantly reduce Kashmiri apple farmers’ profits.
- Saffron production:
Kashmir accounts for approximately 90% of India’s saffron production. Local farmers, on the other hand, frequently receive small profits as a result of middlemen and market dynamics. Firms and intermediaries that supply saffron to the rest of the country have a large influence on its pricing and distribution. Small-scale farmers typically sell their produce to these entities on terms that benefit the buyers, resulting in lower earnings for the growers. Furthermore, the influx of less expensive saffron imports from countries such as Iran has increased competition in the Indian market. This situation enables middlemen to further reduce the prices offered to Kashmiri farmers, exacerbating their financial problems.
Benefits for the Indian Economy and Impacts on IIOJK:
Kashmir represents a land of natural beauty and resources, but whilst the rivers, forests, and minerals make India grow, the people of Kashmir have nothing to be happy about. The electricity generated from Kashmiri dams lights houses and cities in Delhi, Punjab, and Haryana, but large numbers of families in Kashmir suffer from power cuts. Then, big corporations arrive, take out timber and minerals, and leave—without building schools, hospitals, or jobs for the locals. In spite of having plenty, poverty and joblessness are the griefs of Kashmiris. Young people are full of potential, but they have few opportunities. Meanwhile, deforestation, unregulated mining, and water impoundment are destroying the environment, endangering the very ground on which people relied over the generations. It is like the whole economy is set in such a way that it is not meant to uplift Kashmir, but rather Indians. Rather than developing together, Kashmir is being sustained, and the people of Kashmir are marginalized in their own territory.
Conclusion and Recommendations:
India’s control over Kashmir’s water supplies, timber, minerals, and agricultural economy has effectively transformed the region into an Indian economic colony. As India continues to profit, the people of Kashmir remain poor, jobless, and suffocated by environmental degradation. This resource exploitation should be addressed through sustainable and just policies. Local Kashmiri authorities must be delegated decision-making responsibilities, as well as equitable access to employment and profits. Legal protection for farmers and miners must be implemented alongside environmental protection against over-mining, forest depletion, and water depletion. The international community, particularly the United Nations, should focus on making these practices more transparent and accountable. To eventually restore Kashmir’s economic rights, democratic reforms, local job quotas, and a complete shift from exploitation to empowerment are required.
This report is authored by Muhammad Abdullah Shah, an intern at YFK and a student of International Relations at IIUI.
